Strong membership growth highlighted CUNA's January Monthly Credit Union Estimates.
“At 0.41%--or an annualized rate of nearly 5%--memberships grew at the fastest January pace in decades,” said Jordan van Rijn, CUNA senior economist. “The January monthly estimates bode well for continued strong membership growth in 2018.”
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Credit union loans outstanding grew 0.7% in January, compared with a 1% increase in December. Home equity loans led loan growth during the month, rising 1.6%, followed by other mortgage loans (1.5%), used auto loans (1.2%), new auto loans (1.0%), and adjustable-rate mortgages (0.4%). On the decline during the month were credit card loans (0.7%) and fixed-rate first mortgages and unsecured personal loans, which both declined 0.1%.
“Auto lending shows no signs of slowing down in 2018: the monthly estimates show that used and new auto loans both grew by over 1% in January--annualized rates of over 12%,” van Rijn said.
“Although interest rates continue to rise, we haven’t yet seen a significant impact on mortgage or home equity lending,” van Rijn added. “In fact, HELOCs and second mortgages were up over 1.5% in January, an annualized rate of over 18%. This could be due to consumers hoping to lock in low rates before they rise further. We expect 3 to 4 rate hikes this year, with a total increase in the Fed rate of 75 to 100 basis points. This will eventually decrease the demand for home equity loans, but it should be a fairly gradual process.”
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Credit union savings balances declined 0.9% in January, compared with a 1.1% increase in December. Money market accounts led savings growth during the month, rising 0.6%, followed by one-year certificates (0.4%). On the decline during the month were share drafts (5.3%), individual retirement accounts (0.9%), and regular shares (0.8%).
“As is common for this time of year, savings, share drafts and regular shares all declined in January,” van Rijn said. “However, we expect savings and deposits to pick up significantly in February and March, as people receive their tax refunds and begin to benefit from the new tax cuts.”
The growth in loans and decline in savings caused the loan-to-savings ratio to increase to 84.4% in January from 83.1% in December. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) decreased 12.9% in January from 13.5% in December.
Total credit union memberships grew 0.4% during January to 114.5 million.
Credit unions’ 60-plus day delinquency remained at 0.8% during January.
The movement’s overall capital-to-asset ratio remained at 10.7% in December. The total dollar amount of capital increased 0.1% to $150.3 billion.
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
